Fee Architecture

9.1 Market Fees

Market fees are charged per asset and collected by SwapBlok as the issuer of all wrapped assets on SB Chain. The fee is charged on the asset received by the trader (the output of the swap).

The fee parameters are set on each asset and controlled by the SwapBlok committee:

• market_fee_percent: the fee rate in hundredths of a percent (e.g. 20 = 0.20%)
• max_market_fee: an absolute cap on the fee per trade (prevents excessive fees on very large trades)
• charge_market_fee flag: must be set to true on the asset for fees to be collected

Market fees accumulate in accumulated_fees on each asset's dynamic data object. They are claimed periodically by the SwapBlok treasury account via asset_claim_fees_operation.

The market fee rate varies by pair category — the full per-category breakdown is in Section 9.5. The maximum market fee is 0.15%, applied to major cross-chain and exotic pairs. Stablecoin pairs carry a lower market fee. All market fees apply to the output asset only (single-sided) and flow to the SwapBlok treasury via accumulated_fees. Rates are governance-adjustable per route and expected to decline on high-volume routes as liquidity depth matures. All changes require 72 hours of public notice.

9.2 Pool Taker Fees

Pool taker fees are set per liquidity pool and are independent of the per-asset market fee. They are retained inside the pool on every swap, increasing the redemption value of LP tokens over time.

• taker_fee_percent: the pool taker fee rate (e.g. 20 = 0.20%)
• withdrawal_fee_percent: a fee applied when an LP exits the pool, discouraging short-term liquidity provision

The standard pool taker fee is 0.20%, retained by LP providers on every swap across major cross-chain and exotic pairs. Stablecoin pools may carry a reduced taker fee in line with the lower total fee targets for those pairs (Section 9.5). Taker fees go entirely to LP providers and are the primary mechanism through which liquidity providers earn native asset income — SwapBlok receives no share of the taker fee.

9.3 Fee Flow and Treasury

The complete fee flow for a wETH/wSOL swap (major cross-chain pair):

User swaps wETH → wSOL

Step 1: Market fee on wETH sold
        0% (sell-side fee set to zero for competitiveness)

Step 2: Pool calculates wSOL output via x × y = k

Step 3: Pool taker fee on wSOL output
        0.20% → remains in pool → LP token value increases

Step 4: Market fee on wSOL received
        0.15% → accumulated_fees on wSOL asset

Step 5: User receives net wSOL amount

Total swap cost: ~0.35%
SwapBlok earns: 0.15% (as wSOL in accumulated_fees)
LPs earn:       0.20% (as wSOL retained in pool)

Bridge deposit fee. The fee flow above covers the on-chain swap only. For users arriving from an external chain, the 0.10% bridge deposit fee (Section 9.6) applies at the point of wrapped asset minting — before the swap. The table below shows the total protocol cost for the most common user journeys:

Withdrawals back to an external chain carry no additional SwapBlok protocol fee (Section 9.6).

Treasury collection and distribution cycle:

accumulated_fees (wSOL on SB Chain)
        │
        ▼  [asset_claim_fees_operation]
SwapBlok treasury account (on SB Chain)
        │
        ├──► PHASE 1  (<$1M daily volume)
        │    100% → operations, liquidity seeding, audits, runway
        │    Burn: 0%
        │
        ├──► PHASE 2  ($1M – $10M daily volume)  [governance activation at $1M milestone]
        │    Years 1–5:  40% → treasury / operations
        │                60% → SBT purchased via exchange router → burned permanently
        │    Year 6+:    40% → treasury / operations
        │                30% → SBT purchased via exchange router → distributed as LP SBT rewards
        │                30% → SBT purchased via exchange router → burned permanently
        │
        ├──► PHASE 3  ($10M+ daily volume)
        │    Years 1–5:  15% → treasury (operations self-sustaining by this point)
        │                85% → SBT purchased via exchange router → burned permanently
        │                     (~$4.65M/year burn at $10M daily volume at max 0.15% fee rate)
        │    Year 6+:    15% → treasury
        │                35% → SBT purchased via exchange router → distributed as LP SBT rewards
        │                50% → SBT purchased via exchange router → burned permanently
        │                     (~$2.74M/year burn at $10M daily volume at max 0.15% fee rate)
        │
        └──► Treasury remainder → bridge withdrawal → real asset in cold wallet
                │
                ▼  [wSOL burned on SB Chain; co-signed with ika.xyz]
             Real SOL released to SwapBlok cold wallet (on Solana)

Years 1–5 (LP emission period):

Year 6+ (post-emission period):

The burn_fee_percent governance parameter exists at genesis and is set to zero. The Foundation commits to proposing activation when daily volume crosses $1M. The activation is announced as a public milestone, not applied silently. The Month 60 transition from the emission-period split to the post-emission split is encoded as an automatic protocol parameter at genesis, requiring no governance vote.

9.4 Operation Fees

Operation fees for all user-facing actions are set to zero at genesis. This covers swaps, order placements, bridge deposits, bridge withdrawals, LP deposits, LP withdrawals, and governance votes. There is no gas cost to use SwapBlok.

SwapBlok's revenue model is built entirely on market fees charged at the asset level on trade volume, not on charging users to interact with the chain. This design removes all onboarding friction: a new user can bridge assets and trade immediately without first acquiring SBT. Witness block rewards, funded from the 13% token allocation, compensate the network's infrastructure operators independently of operation fees.

9.5 Swap Fee

SwapBlok applies differentiated total swap fee rates by market type, reflecting the distinct impermanent loss profiles, competitive dynamics, and liquidity depth of each pair category. The total per-swap cost is the combined market fee (Section 9.1) and pool taker fee (Section 9.2).

Stablecoin pairs (wUSDT/wETH, wUSDT/wBTC, wUSDT/wSOL): total swap fee 0.15%–0.25%. Stablecoin pools carry minimal impermanent loss risk because one side of the pair maintains a near-fixed value. Lower fees are sustainable in these pools and keep SwapBlok competitive against specialised stablecoin venues. Rates are volume-tiered: pools reaching consistently high daily volume qualify for committee-approved fee reductions toward the lower bound.

Major crypto pairs (wETH/wSOL, wBTC/wETH, wBTC/wSOL): total swap fee 0.25%–0.35%. Cross-asset pairs between major assets carry meaningful impermanent loss exposure as both assets can move independently in either direction. Rates apply at the lower end for high-depth, high-volume pairs and toward the upper end where external market liquidity is thinner or price volatility is higher.

Exotic and lower-liquidity pairs: total swap fee 0.35%–0.40%. Pairs involving lower-capitalisation assets or newly listed tokens carry the highest fee rate to compensate LPs for elevated impermanent loss risk and wider bid-ask spreads relative to external venues. The 0.40% ceiling aligns with the standard Uniswap v2/v3 fee tier for equivalent pair types.

All rates are governance-adjustable per route. High-volume routes may be reduced by committee vote as liquidity depth and LP participation mature. All changes require 72 hours of public notice per the Foundation's governance commitments (Section 7.5).

9.6 Bridge Fee

SwapBlok charges a 0.10% protocol bridge fee on deposits only (assets moving from an external chain into SB Chain). The fee is applied at the point of wrapped asset minting: when a user bridges 1 ETH, 0.999 wETH is credited to their SB Chain account and 0.001 ETH equivalent (as wETH) flows to accumulated_fees. Withdrawals carry no protocol fee. Bridging wrapped assets back out to the source chain is free of SwapBlok charges. The bridge fee is collected in the bridged asset, not in SBT, and enters the same treasury distribution pipeline as market fees (Section 12.3).

Fee structure per bridge transaction

The relayer fee is not controlled by SwapBlok. It is paid by the user directly on the source chain and compensates the permissionless relayer that delivers the Merkle proof to SB Chain. Users sign this step through their external wallet (MetaMask, Phantom, or equivalent).

Free withdrawals are a deliberate design choice. Charging to exit contradicts the non-custodial architecture and creates regulatory exposure. Revenue is captured on deposit and through ongoing market fees on every trade. The withdrawal is the end of a profitable user journey, not a new revenue event.

Competitive positioning

At 0.10%, SwapBlok sits slightly above the cheapest bridge alternatives, reflecting the value of a non-custodial architecture rather than competing on price alone.

The $4–5 premium over the cheapest alternatives reflects the unique trust model: unlike any other bridge, neither SwapBlok nor any third party holds key material that could be compromised. For users moving material capital, the non-custodial guarantee is worth this spread.

Governance adjustability

The bridge fee is set by the bridge_fee_percent governance parameter, adjustable per route. High-volume routes (ETH↔SOL, ETH↔BTC) may be reduced to 0.07% by governance vote once liquidity and throughput justify the cut. No route may be set below 0.05% without an 80% supermajority vote.